Apple: Stock Research Analysis

Valuations depend on forecasts. The reliability of the forecasts will then depend heavily on complete analysis of the industry, in addition to the evolving changes in the economy. It also requires understanding of the business and financial characteristic of the industry.

Apple Inc. designs, manufactures, and markets personal computers, mobile communication devices, and portable digital music and video players and sells a variety of related software, services, peripherals, and networking solutions. The Company sells its products worldwide through its online stores, its retail stores, its direct sales force, and third-party wholesalers, resellers, and value-added resellers. (Source: Company Form 10-K)

The figure above shows Apple Inc, the Market cap lead, and Dell, the Market cap last, corporations and their market share compared to the industry and the technology sector. As you can see above Apple Inc. is almost as close to the market cap for the Personal Computers industry. Although, it does have a smaller P/E ratio compared to the industry it still is the highest among the top leaders within the industry. Compared to the industry Apple’s does not have a debt to equity ratio, which is excellent. Apple’s net profit is also the highest within the top competitors and the industry. The price to free cash flow exceeds the industry as well as the technology sector.

Companies with the most consistent earnings history or strongest growth prospects receive the highest P/E multiples. We calculate price targets for the current and next fiscal year by applying the stock 's current multiple to the average professional analyst 's estimate. Valuation using RadioShack 's current multiple (P/E): Fiscal Year

Valuation Estimates: Actual Price (6/1/07): $21.63 Trailing P/E $9.57 Forward P/E $7.80 PEG $2.92 P/B $54.00 P/EBITDA $28.24 P/FCF $123.39 EV/EBITDA $3.54 Intrinsic Valuations Discounted Dividend Free Cash Residual Income LR ROE AEG Actual $18.40 $29.71 $3.22 $7.21 $8.79

Throughout the past year, Apple stock has had an astounding growth of 45% over the past twelve months, as well as a 10% growth of dividends by 10%. This increase in dividend is expected to increase by 7.43% over the next 12 months. Along with stock price and dividends, earnings per share is also expected to rise. Earnings per share is expected to rise from the current amount of $1.88 to as high as $10.74 per share. Apple’s marketing strategy is designed to keep stock prices high and shareholders happy. This growth in Apple stock is expected to continue to rise with a median change of 8.7% in the next twelve months. The current state of Apple stock is very impressive and market predictions show that it should become even more impressive in the next twelve months. (Financial Times

The valuation process, in this case, requires us to estimate the short-run non-constant growth rate and predict future dividends. Then, we must estimate a constant long-term growth rate at which the firm is expected to grow. Generally, we assume that after a certain point of time, all firms begin to grow at a rather constant rate. Of course, the difficulty in this framework is estimating the short-term growth rate, how long the short-term growth will hold, and the long-term growth rate.

Second once Apple stabilized after year 2019, the prediction of growth is 3%, and Beta was projected to be .96. Again, by using the boundaries stated above: the (Ke), weight of equity/debt, and WACC were as follow 6.34%, 80%, 20%, and 5.63%. These numbers were somewhat similar to its high growth stage; therefore, signifying Apple is still a strong company once it stabilizes. Yet, another reason why Apple can provide such attractive returns. Conversely, finding the Terminal Value (Pt) of the company, which is the value of the company at a future year, projected the PV for stable growth, in this case it was 2020. The (Pt) was over $1 billion, yet again another reason why Apple creates a great investment opportunity. Moreover, by adding all of the PV, including the stable growth year, the intrinsic value of the firm is over $966 million and minus the current value of debt, Apple is still worth (value of equity) over $926 million. This equity divided the current number of shares outstanding; Apple’s intrinsic value of stock is $988.80 per share. By comparison the current stock price, which is $649.79 per share, the stock value is undervalued. Likewise, making (AAPL) a rewarding opportunity that must not be taken for granted.

Apple Inc. designs, manufactures, and markets personal computers, mobile communication devices, and portable digital music and video players and sells a variety of related software, services, peripherals, and networking solutions. The Company sells its products worldwide through its online stores, its retail stores, its direct sales force, and third-party wholesalers, resellers, and value-added resellers. (Source: Company Form 10-K)

Our group decided to analyse the company Apple Inc., listed on Nasdaq Market as AAPL. The analysis was mainly based on the annual financial report of the company for the fiscal year ended on September 29th 2007. Apple Inc. is today one of the most

Apple Inc., together with subsidiaries, designs, manufactures, and markets mobile communication and media devices, personal computing products, and portable digital music players worldwide. The also sell a variety of related software, services, peripherals, and networking solutions.

Apple, Inc. currently has a Price-to-Earnings ratio of 43.70, compared to the industry standard of 36.50, and the S&P 500 average of 20.73. This indicates that Apple has a lower amount of risk than other firms in the computer manufacturing industry and other firms in

Apple had nearly $137 billion of cash at the end of Dec 2012. Over the past few years, the Company had been highly successful with the launch of the iPhone 3G in 2008, and which was followed by the launch of iPad in 2010. The Company enjoyed high profitability, and was able to keep its costs at a minimum. The gross margin on the iPhone was between 49% and 58% from October 2010 to March 2012, and the gross margin on the iPad was between 23% and 32% in the same time period. Apple’s capital structure included no debt; hence, there was no outflow of cash for making interest payments.

On the contrary, Apple stock is expensive costing on average $120.04 per share which means investors pay considerably more for the stock yet, the stock devalues in price 131 out of 253 days. At this rate investors lose money at a daily rate more often Microsoft and Staples.

On December 12, 1980 Apple became a publicly traded company on the NASDAQ Global Select Market.The ticker symbol of Apple is AAPL. As of October 2nd, it is trading at $109.46 a share. On February 23rd Apple hit its highest price per share at $133 per share and was worth $96.26 way back in October 16th of 2014. If someone bought shares on this day they would have seen a significant increase in the value of their shares.